13th December 1995

ADDRESS OF THE CHIEF MINISTER OF GIBRALTAR, THE HON J.J. BOSSANO TO THE ROYAL INSTITUTE ON INTERNATIONAL AFFAIRS, LONDON.

I wish to thank you for giving me this opportunity to address this prestigious Institute and explain the Gibraltar view.

On November 14th 1983, my predecessor addressed you on the them "The Outlook for Gibraltar". I will be giving you today an update and broader picture of how we have done in the intervening 12 years and where we are going.

In 1983 you were told "The Spanish Government began imposing restrictions on Gibraltar in 1954 after the Queen's visit at the end of her first Commonwealth tour". More restrictions were started in 1964 and gradually increased in succeeding years. Exports to Gibraltar were banned, a prohibited flying area was introduced, telephone and telegraph links were cut, the ferry service to Algeciras was stopped and finally the frontier was totally closed and the stockade was completed by 1969.

What has changed since then? Not much. The land frontier is open, sometimes more open than other times depending on the mood. Today's address will no doubt lead to frontier queues. The prohibited flying area is still there. No ferry from Algeciras has appeared on the horizon. Telephone links exist, but not in a roaming agreement for Gibraltar mobile phones which can be used once you reach the Pyrenees and enter France.

The Spanish reaction was to punish us in 1954 for the rapturous welcome our people gave to Her Majesty. We continue to be punished for it today. We do not regret the display of loyalty and affection which greeted her visit.

The stockade was supposed to bring us to our knees. It did the opposite. It united us as a people and increase our determination and will to succeed. Much has happened to the Gibraltar economy since those days and particularly since you were previously addressed on the subject of Gibraltar in 1983.

We have today an economy that is no longer dependent on the British military presence as its main source of income. Defence spending is now 9% of GDP as opposed to 65%. The change in the structure of our economy was starting in 1983 where the previous the previous chief minister told you of the impending closure of naval dockyard.

In 1988 we embarked on a structural adjustment programme which like all structural changes has not been painless but which is now virtually complete and has produced a truly remarkable transformation.

In the first period much of the economic growth was due to an accelerated investment programme and a large increase in gross domestic fixed capital formation. We borrowed money to finance land reclamation, infrastructure development and building new homes for our people. Although at the time we were criticised and some said that this was a gamble exposing us to a third world debt trap. In fact it has paid off. In 1992 we set about amortising the national debt by creating a special fund to pay it off. This year we have brought the national debt down from 33% of GDP to 22% of GDP by repaying £32m and it is now back to the cash level of October 1991.

Obviously sound public finances are only possible if one has a robust private sector. The strongest growth took place in 1991 led by the capital investment programme. At the peak the construction industry trebled in size from 800 jobs to 2500. Since then it has gradually fallen back to 800. Outside construction, private sector employment has grown every year since 1988. Imports have grown every year since 1988. Corporate profits have grown every year since 1988. This success story is not however complete because it has not been enough to compensate for the massive MOD run-down. We have only been to mitigate not eliminate the effect of MOD cuts. Unemployment has risen at the same time to 7% of Gibraltarians and 25% of Moroccans. We are currently tackling this with help from the EU and using ESF funding for training programmes and ERDF funds for investment projects for investment projects matched by Government and private sector funds.

Recently we have had a floppy disk factory and a cut crystal hand crafted industry starting up. These are the first manufacturing industries in our history. Their success will depend on a level playing field in access to the European markets in which they will compete.

We identified the greatest potential for our economy in the financial services industries. Since 1988 bank assets have grown tenfold from £600m to £6bn. Employment in the sector has increased from 600 to 1500.

This growth is in fact minute fraction of what it could have been and what we had planned it should be since 1992. Had we been allowed to do what we were promised in 1991 I would now be telling you that Gibraltar had a sustainable economic future without any negative aspects. A secure future in economic terms on which to build a political future within the EU, to which we belong and where we want to be.

We have been members of the community with UK since 1973 and we are citizens of the Union with the same rights as every one else. I regret to say our fellow union citizens in Spain in the campaign to take us over are behaving in a totally un-European fashion. Spain believes it has a perfectly legitimate right to exploit its position in the Union to inhibit in every possible way our attempts to develop legitimate economic activities exercising community rights.

I condemn Spain for this, not just because it is not worthy of a modern democratic country to behave towards a small neighbour today as the fascist did in take 1960's, but even more because it is in flat contradiction of the principles of which we are all required to abide as fellow members of the Union. Although the primary responsibility rests with the UK to protect our community rights, our fellow citizens in the other member states cannot look on what is happening as a bilateral anglo-Spanish problem and consider themselves idle bystanders. They also have a moral obligations to ensure respect for the legal and moral requirements of the fundamental freedom of free movements and the right to compete that we Gibraltar citizens of the Union have to trade within the single market from our country which is community territory. I could give many examples of Spain's unacceptable behaviour but I will pick on just one, because it is the most important one to illustrate what is taking place.

The story starts, as I have said, in 1991. I was promised by the UK Government, in writing, that our banking licenses would be notified to the commission and would rank on an equal footing with licenses of every other member state including UK's. We based our economic diversification plan on the belief that this promise would be honoured and that the UK would be able to deliver.

In July 1992, in a meeting of the Banking Advisory Committee the UK recorded the position as regard Gibraltar licenses. This was immediately rejected by the Bank of Spain, not on the grounds of having doubts about the soundness of our banks but on instructions from the Spanish Ministry of Foreign Affairs on grounds of sovereignty. We then embarked on a battle for recognition which still goes on today, which no one knows when it will end and which have seriously damaged our programme for economic survival for the millions we have lost out on in inward investment and the accompanying job creation. The UK Government is still promising us that they will obtain recognition for our industry. However, they have argued that in order to be able to do we had to introduce measures that ensured that the standards of the licensing and supervision of Gibraltar based financial services providers matched those of UK and if necessary exceeded Union requirements.

We have never been entirely convinced by these arguments but have given UK the benefit of the doubt and gone along with their wishes.

The latest action in this respect has been to counteract the Spanish accusation that our industry is rife with money laundering. Not only have we implemented Directive 91/308 and the Vienna Convention, but we have just extended these provisions on an all crimes basis and the new law takes effect from the January 1 1996. We will then have more extensive anti-laundering provisions, based on the UK law, than Spain itself has, than most other member states have and more than any other British dependency has at this point in time. I predict it will not change Spain's position one iota since the money laundering issue is a propaganda smoke screen to legitimise their actions and hide their real motives which are political.

And I can prove it.

As I speak to you here and now at this very moment there is a debate taking place in the Spanish parliament on this self same issue

The motion being debated now accuses the UK of seeking to unilaterally alter our position in the Union by converting de facto into the sixteenth member state. It is based on the analysis in a paper of September 11 prepared by the Ministry of Foreign Affairs which argues that granting recognition to Gibraltar as a competent authority able to issue banking and insurance licenses is an example of this attempt by the UK. It is of course complete nonsense since Gibraltar banks were already recognised as property licensed community institutions, subject to community law, before passporting came into play January 1 1993 as a result of the establishment of the single market in banking services following implementation of the second banking co-ordination directive. The status we are seeking is the one we have always had since we joined on the January 1973 and which Spain accepted on her own accession thirteen years after us.

My Government fully accepts that we must meet our obligation to transpose community directives into the national law of Gibraltar. We recognise we have a duty to act in order to protect the UK from the risk of infraction proceedings. But obligations is one side of a coin and on the other side are rights. The UK for its part has a duty to us to guarantee that we shall enjoy community rights. If we comply with the conditions for passport licenses then we must be guaranteed that our banks, insurance companies and other services providers are permitted to compete for business throughout the territory of the Union in accordance with the provisions of the Treaty. Moreover given our relationship as a dependent territory the UK has in the words of the charter of the UN a sacred duty to assist in every possible way the economic, social and political development of my people.

What then is the way forward. The approach that the UK has adopted until now has failed.

The cornerstone of British policy in Gibraltar has been a rock solid commitment that we will never pass and the Spanish sovereignty against our wishes was advising was advising the Spanish Government that they should woo the Gibraltarians. This has been going on for 30 years and has got us nowhere.

On November 14 1983 my predecessor told you that Spain was claiming EEC rights for its nationals in Gibraltar before it joined the EEC and that this was not acceptable to us.

A year later when he presented the Brussels agreement to the Gibraltar House of Assembly he revealed that the day after he said this November 15 he met the Foreign Secretary in London and was persuaded to agree in principal to the advancement of EEC rights in Gibraltar for Spaniards in exchange for the lifting of all restrictions which the Brussels agreement was supposed to bring about.

I am not blaming the Royal Institute for that sad event. I can tell you that I opposed acceptance of the Brussels agreement when it was signed and have campaigned against it ever since.

The then Chief Minister told you on November 14 1983 I quote "it is true that restrictions will have to go when Spain enters the community but we don't know when that will be and we cannot wait".

Spain obtained community rights in Gibraltar in February 1985 and the restrictions did not go. She joined the community in January 1986 and the restrictions still did not go. In 1969 she had mounted a blockade against Gibraltar by land, sea and air. Communications by land of a sort was restored in 1985. Sea and air communication restrictions still remain today. Today the Spanish Parliament will approve a motion calling on the Government to give an impetus to the Brussels negotiation on the basis of the strict application of the principal of territorial integrity to restore Spanish sovereignty over the Rock which was lost in 1704.

In November 1983 my predecessor said to you: " the vast majority of Gibraltarians want to live under British sovereignty but given normal and friendly relations, given mutual respect, given co-operation in tourism and trade and outbound contacts and a common status as nationals of the European Community, the people of Gibraltar may one day, take a different view of this relationship with the Spanish state. He added this is not a promise, not even an offer".

I will go further, if that gives Spain hope then I will be blunt. Gibraltar will never be Spanish. I will campaign for as long as I live against my countries incorporation into the Spanish state, and others will follow me.

Is there then no way forward. Yes within the Union, Spain must accept its community obligations and grant us the same community rights we have given them even 11 months before anyone else in Europe, UK included granted the same such rights. We recognise Spanish banks licenses and have permitted passports in 1993 as required by their community. We recognise Spanish ID cards as valid travel documents for the free movement of persons, Spain rejects our ID cards.

Spain has to change not because we make vague hopeful noise but because our conduct does not befit her membership of the Union. Because her attitude to us is in flagrant breach of the letter and the spirit of the Treaty that the creates the Union. We are committed Europeans and are entitled to look to the UK and other community partners to act in our defence if the vision of the Europe of the year 2000 has any meaning.

The UK's hope was that common citizens of the Union would at least dissolve if not resolve the sovereignty dispute. It shows no sign of so doing. My appeal to the UK Government is to honour its obligations to my people by giving us access to the UK market and to the market of other member states so that we can survive economically. Unless this is done the commitment to honour our wishes in the Constitution is a hollow one, if we have to defend our birthright by sacrificing our living standards not because we cannot compete to earn a living but because we are not permitted to appease Spain.

If need be let us put to one side market access to Spain for our banks and other businesses. We are content to be able to trade freely with the other 400m fellow citizens of the Union and for the present the ones that live in Spain.

Let us get on with the job of building a suitable economy for Gibraltar by exercising our rights in the Union and forget for the present the Brussels process in the developments in the Union and Spanish society will produce new opportunities for putting the Spanish/Gibraltar relationship on the basis that should have happened and did not happen 10 years ago, of mutually beneficial co-operation and peaceful coexistence. If Spain believes that she can get away with riding rough shot on own Union rights as she has done so far, why on earth should she not seek to use such a lever to bend our will even though the policy has failed her since it was started 41 years ago.

My vision of Gibraltar's future is based on the thesis that small is beautiful. A concept that is coming into its own with IT advances. The business world is moving simultaneously into a global marketplace with the EEA and NATTA and simultaneously conglomerates are down-sizing. The future world with Internet creates the closest thing to the classical market economy that has ever existed. Producers and consumers are reaching each other with less geographical handicap that ever before. Even our political and social structures are moving in this direction. The Union provides freedom of movement and harmonisation of standards. But this harmonisation does not have to mean homogenisation as Europe sceptics fear.

In the future under Europe, the nation state is not the only relevant form of organising and territorial integrity of the nation has no meaning in a frontier-less Europe. But it is still also the Europe of the regions and the city states. The Europe of the peoples with the preservation of their distinct identity that makes the cultural history of our Union so varied and wide. No-one wants to sacrifice that.

We are committed Europeans but we are a people in our own right. We have recognition as a distinct people and a colonial rule distinct from administering power by the UN since the process of de-colonisation started in 1948. We are proud of our British heritage and our 300 year association with the UK but we are Mediterranean people not Anglo-Saxons. Small countries like Gibraltar have a unique opportunity to provide a quality of life that seems much more difficult to achieve in larger centrally structure nation states. These are real issues being debated and sometimes deeply dividing Europeans today. We Gibraltarians love our country and simply want the tools to do our job to develop our potential and play our full part in the context of the new Europe. A many room mansion in which perhaps a small attic can be found for the 21,000 Gibraltarian European citizens can take their rightful place.

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